While everyone agrees that it is always best to have the actual parties and counsel physically present at a mediation, this is not always possible. Often, the plaintiff may appear by telephone and at times, I may not even be able to speak to the plaintiff but only to her counsel sitting in my conference room who then speaks to plaintiff by telephone when I leave.

A recent mediation has left me unsettled….and now wondering whether it is not such a bad thing that the California Law Revision Commission (CLRC) is about to recommend that an exception to mediation confidentiality be created for claims of alleged malpractice, professional negligence, breach of fiduciary duty etc. arising during a mediation.

Let me set the scene: I conducted a mediation in which both a representative of the defendant and defense counsel were physically present. Plaintiff’s counsel was present; plaintiff was available by telephone. I never spoke directly to plaintiff but was assured she was on telephone stand-by.

As the mediation proceeded, I orally conveyed  offers and demands. That is, I took plaintiff’s demand to the defendant’s representative and her counsel and orally conveyed it, and then took the defense’s response and orally conveyed that to plaintiff. When I left the plaintiff’s counsel room, I assumed counsel would then telephone plaintiff to convey the offer.

As the matter did not settle at mediation, I continued to work with the parties using the telephone to orally convey offers and demands. I was still not able to help the parties reach a resolution.

I later learned that the defense counsel then noticed the deposition of the plaintiff. During the deposition, defense counsel asked the plaintiff if her counsel had, among other things, conveyed any of the settlement offers made during and after the mediation. The response of plaintiff- under oath (as this was at a deposition) was “no”. She was unaware of both the oral offers made during the mediation and the telephonic offers I conveyed after the mediation session.

Somehow, it came out that plaintiff’s counsel’s reasoning was because the California statute and ethical rule on the subject require that ONLY WRITTEN offers of settlement be conveyed to the client (“…all amounts, terms and conditions of any written offer of settlement made by or on behalf of an opposing party…” “shall promptly” be communicated to the client. Business and Professions Code §6103.5(a)), counsel believed that she was not obligated to convey the ORAL offers made during or after the mediation. Plaintiff further testified that had she known of the offers at the time they were made, she would have accepted them and settled the case. (Further, California Rule of Professional Conduct 3-510 requires the communication of written offers of settlement to the client while Rule 3-500 requires that an attorney “…shall keep a client reasonably informed about significant developments…” of the case.)

All of this occurred  close to trial. The statute at issue allows for plaintiff to be awarded her attorney fees and costs. Thus, defense counsel (assuming plaintiff wins at trial) has every incentive to attempt to have this conduct brought to the court’s attention to mitigate the fees and costs awarded to plaintiff’s counsel by showing the case would have settled without trial. But, because all of this is cloaked with mediation confidentiality, I do not know whether defense counsel will be successful in this attempt. Undoubtedly, defense counsel can introduce the deposition transcript to show that plaintiff was not made aware of the offers but how much weight this will carry without the rest of the story is unknown.

As I have noted through numerous blogs in the past, the California Law Revision Commission (CLRC) is about to recommend to the California Legislature that an exception to mediation confidentiality be created so that a party can bring claims of alleged malpractice etc. out into the open. I do not know if such an exception will extend to allowing opposing counsel to raise the issue.

I do know that the above situation gives me pause and forces me to think about the tentative recommendation of the CLRC in a new light and different perspective.

… Just something to think about.


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